The bankruptcy of the Silicon Valley Bank (SVB) has caused a shock wave in the financial markets, however, German startups seem to have been relatively unaffected, as very few had their main account with the SVB. According to Filip Dames, founder of venture capitalist Cherry Ventures, the majority of German start-ups did not hold deposits or loans from the SVB.
Symptomatically, financiers have been reluctant to make large capital injections and have shied away from risky business models due to rising interest rates. Startups celebrated a record year in 2021, but financing for German start-ups collapsed in 2022, resulting in plummeting valuations and some growth companies cutting jobs.
Despite the bank’s bankruptcy, the German start-up industry might still be safe, as an important step was taken to avoid short-term liquidity bottlenecks for affected German startups. The security of all SVB deposits by US authorities allowed German start-ups that have deposits in the British SVB subsidiary to regain access to their money.
The collapse of SVB is not a good sign for the German start-up industry, nonetheless.The Swiss central bank had to help ailing major bank Credit Suisse with a credit line of up to 50 billion francs in order to calm the financial markets and prevent a crisis; however, no major effects are expected for Germany, as German banks were deemed “robust, stable, and resilient” by the Bundesbank.
